IRSMedic.com

Connecticut Tax Amnesty First Look

Mon, 29 Dec 2008 10:03:13 -0500

Amnesty program only applies to unfiled returns or under reported tax returns. If you owe DRS money for properly filed returns, the Amnesty Program does not apply. The text of the bill states that the Amnesty will apply when: "(1) a tax return was required by law to be filed with the Commissioner and for which no return has been previously filed or made by the Commissioner on behalf of an affected person; or (2) a tax return was previously filed but not examined by the Department and on which the tax was underreported." Note: the Amnesty program does not wipe away debt. Taxpayers still need to make arrangements for payment. While the Amnesty program will stop any criminal or civil penalties from accruing, taxpayers will still need to find a solution to pay DRS, either through bankruptcy, an Offer In Compromise (DRS as well as IRS provides this program) or an installment agreement.

What do Ana Ivanovic, Soren Hansen, and Coldplay have in common?

Tue, 23 Sep 2008 18:12:13 -0400

Well the IRS will be paying "special attention" to these three and any other foreign athletes and entertainers who work in the United States. The IRS recently launched an "Issue Management Team" focused on improving compliance by foreign athletes and entertainers who work in the United States. And the initial focus will be on non-Citizens engaged in tennis, golf and music. This initiative should come at no surprise. The IRS enjoys to find famous people in violation of the tax code. Why? Well, the IRS works on intimidation because it has limited resources. It can't audit everyone. So when prosecuting tax evaders, they want to make sure they have a defendant who will earn a lots of "face time." IRS reports that it will use a three-pronged attack for this initiative: 1. Reaching out to foreign athletes and entertainers to encourage compliance with income reporting and tax payment requirements 2. Providing IRS enforcement personnel with information they need to identify and work compliance issues frequently encountered with this population and 3. Conducting direct compliance and enforcement activity. (which just seems to be part of Number 2, if you ask me)

Florida Taxpayer Charged in Murder for Hire Plot of an IRS Revenue Officer

Fri, 19 Sep 2008 09:44:53 -0400

On July 30, 2008, Randy Nowak was charged in a criminal complaint in the U.S. District Court, Middle District of Florida, Tampa Division, with attempting to kill an Internal Revenue Service (IRS) Revenue Officer while such officer was engaged in the performance of official duties. According to court documents, on or about June 24, 2008, Nowak, owner of RJ Nowak Enterprises, Inc. (a Polk County construction company in Florida), had been asking around to find someone to kill an IRS employee. Nowak sought to kill the IRS employee because she was auditing Nowak, and he stood to lose $4,000,000 that he had hidden offshore. Nowak had an outstanding liability to the IRS of approximately $300,000 related to his personal income tax obligations and had four years of outstanding corporate tax returns for his business that he had not filed. On July 29, 2008, Nowak met with an undercover Federal Bureau of Investigations (FBI) Task Force agent posing as a hit man and paid him $10,000 as a down payment for killing the IRS Revenue Officer. Nowak also asked the undercover agent if he would be willing to burn down the IRS�s office in Lakeland.

On hold with the IRS? You're not alone!

Mon, 08 Sep 2008 14:38:04 -0400

Calling the IRS is certainly can be grueling. Hold times can typically run up to an hour. But of you called, you know you're not alone. The IRS provides these two classical compositions for your listening pleasure. But what the names of these catchy jingles? Well, we have investigated various claims and now are able to reveal the truth "Eine kleine Nachtmusik," by Amadeus Mozart and "Swan Lake" by Pyotr Ilyich Tchaikovsky. Which one is my favorite? I prefer "Swan Lake." That French horn is quite a dandy. "Eine kleine Nachtmusik" reminds me too much of a luxury car commercial from 1988. A little too pompous for my taste thank you.

Better Business Bureau Connecticut Gives "American Tax Relief" a Failing Grade.

Fri, 05 Sep 2008 22:22:26 -0400

According to the firms promising to help Americans reduce their back taxes, so called "tax relief" has become a lucrative industry. The BBB warns however that consumers do not always get what they paid for and can be left to answer to the Internal Revenue Service without the expertise or relief for which they paid. One example is a company called American Tax Relief, which promises to "settle tax debt for a fraction of the debt," and "remove penalties, interest and tax lien." The BBB maintains that more than 150 customer complaints have been filed against this company, which received an "F" from BBB. Two complaints against the company were filed in Connecticut since 2005. The BBB urges consumers to be careful, since many taxpayers have been left with their original tax debt, additional interest and penalties. According to Better Business Bureau Connecticut President Paulette Hotton, the so called tax relief companies overstate their ability to help clients. "Consumers complain that many of these firms exaggerate or misrepresent their ability and expertise in effecting settlements and often promise much more than they can deliver," says Hotton. "They generally attribute their inability to obtain settlements on the fact that the customer provided inaccurate or incomplete information." In fact, none of the firms guarantee that anyone will be able to obtain a settlement of their tax debt. In one case, a consumer paid American Tax Relief $3,900 and sent them a form giving the company power of attorney to represent her. When she checked, the I.R.S. had no record that American Tax Relief represented her, and the company refused to refund her money. "We urge caution," add Hotton. "Many taxpayers have been left with the original tax debt, along with additional interest and penalties. " The BBB advises that if you have a tax debt with the I.R.S., to first seek the advice of a tax attorney, CPA or enrolled agent. Only these professionals can represent you in tax matters. source: http://www.24-7pressrelease.com/press-release/tax-relief-services-deceive-consumers-41699.php

Can the IRS Run Out of Time to Collect Taxes?

Fri, 05 Sep 2008 14:19:21 -0400

YES. The taxman doesn�t have forever to chase down unpaid taxes. Generally, 10 years after the tax is assessed, if the IRS hasn�t collected, the statute of limitations kicks in and debts are forgiven. However, there are some important caveats to be aware of. #1: The statute refers to the date of assessment. Not the tax year. For example, if a tax payer does not file their 2005 1040 until 2007, and the IRS hasn't yet to assess (via a Substitute for Return Mechanism), that means the statute does not expire until 2017. #2: Many things will toll the statute from expiring. For example, if a tax payer files bankruptcy, the statute will not run. Or if a tax payer files an Offer in Compromise (OIC), while the OIC is being considered, that too will toll that statute of limitations. From my professional experience, I have seen instances of where taxes that were due in 2000, because of actions by the tax payer, the period the IRS #3: Tax payers actually agree to extend the statute. This is a huge mistake. Sweet talking IRS employees some how actually convince tax payer to allow the IRS more time to collect taxes. If the IRS ever asks you to extend the period to collect, be sure to get some professional advice first. #4: As the statute gets closer to expiring, the more aggressive the IRS becomes. I have seen taxpayer who for years got away without paying a cent even though they owed the IRS huge amounts. And then when the IRS only has a much more limited time to collect, the IRS unleashes a torrent of levies, garnishments and seizures. These actions cause significant pain, and an emotional drain that is humiliating. Grown men cry and that is a fact. #5. The statute does run while a tax payer is in Currently Non-Collectible status (CNC). CNC status may be a solution to wait out the IRS, but requesting CNC status requires the taxpayer to give the IRS all their financial information (just like an OIC). This strategy could be dangerous if the taxpayer doesn't qualify for CNC. As the IRS deems the debt collectible and is has a very current, very accurate perfect road map to begin collection activity. .

Connecticut Peparer barred from preparing federal tax returns

Wed, 03 Sep 2008 12:33:15 -0400

On June 2, 2008, a federal judge in Hartford, Conn., has issued a preliminary injunction order against Sunita Buddhu, a resident of Wethesfield. The order precludes Ms. Buddhu from preparing federal income tax returns, amended federal income tax returns and other related documents and forms for others. Additionally, the order prohibits the, resident from representing customers before the Internal Revenue Service (IRS); advising, assisting, counseling or instructing anyone about the preparation of a federal tax return; and promoting tax fraud schemes. The court had entered a temporary restraining order against Ms. Buddhu last month. The court found that Ms. Buddhu prepared tax returns for Paradise Consulting Services, a tax preparation business started by her father, Deowraj Buddhu. After her father was incarcerated on unrelated state charges in 2005, Ms. Buddhu took over Paradise Consulting and began operating a tax return preparation business under the name Lotus Consulting. Since 2003, the Buddhus have prepared several thousand individual federal income tax returns, many of which the court found contained deductions on Schedule C that were inflated, had no basis in fact, or were not permissible under the Internal Revenue Code. In addition, many of the returns contained false Schedule E deductions. After Ms. Buddhu learned that many of her customers� returns had been examined by the IRS, she began filing amended tax returns on behalf of those customers, eliminating the disallowed Schedule C deductions, but replacing them with corresponding deductions on Schedule A. The court noted that the IRS subsequently determined that these Schedule A deductions were also improper. In addition, the court found that Ms. Buddhu listed false preparer identification numbers on federal income tax returns that she prepared, and that she made �unfounded� representations to her clients that the IRS does not have authority or jurisdiction to conduct examinations of their tax returns. It is likely that Ms. Buddhu's clientele will be subjected to audits and hit with additional assessments and penalties. As from my experience if the IRS has taken down a preparer, they then immediate go to assess civil (non-criminal) charges against the preparer's clients. But such injured clients should not necessarially "lay down" for the IRS. From our experience, guilt by association is a significant, but not impossible, hurdle to overcome.

IRS�s NASTY New Warning Letters

Tue, 02 Sep 2008 09:27:02 -0400

Many more taxpayers will be getting a nasty surprise in the mail this fall. A new IRS form called the CP 2057 is on its way, warning its recipients that they may be underreporting, and instructs them to file an amended return if they discover an error upon double-checking their return. It asks the taxpayer to work with their employers to correct W2s, 1099s, K1s and other documents, as wells as warning that it will closely examine the following year�s return to see that similar problems don�t crop up. Unlike like the previous warning letter --- the CP 2000 --- which names specific changes to income, payments, credits, deductions or other parts of the return and may have asked the recipient to pay additional tax � the new form does not specify the amount of tax that is owed, leaving it up to the recipient to calculate. I�m sure this new form is going to scare a lot of people who receive it. the CP2000 is scary enough, but at least is is specific enough to let the taxpayer know what the proposed changes are and how much. And because the notcie is even more scary, there is a greater liklihood that a taxpayer will simply ignore the notice and blindly hope for the best. And if a taxpayer has been notified either over the phone or by mail that they owe the IRS, it could be all the warning the taxpayer receives. If a taxpayer doesn't respond to the notice and they don�t pay the IRS completely and voluntarily � the IRS has the right to take every penny owed from them, one way or another. The IRS doesn�t have to take the taxpayer to court or sue them to get their money. If the IRS sends the collection notices and the taxpayer refuses to pay or hasn�t paid in full � that�s all the IRS needs to do. And predictably IRS goes to their arsenal of enforcement techniques. The IRS can dip straight into the taxpayer�s bank account and take their money, garnish wages or salary, take social security, 401(k) or IRA�s, or take any money owed to the taxpayer � like accounts receivable or sales commissions. So if you receive the new CP 2057, be sure not to ignore it, but have it fully investigated by your CPA or tax attorney.

Nation�s Largest IRS Resolution Firm Settles With 18 States

Thu, 14 Aug 2008 17:58:19 -0400

JK Harris, a company which calls itself �the nation�s largest tax resolution company,� recently settled agreements with state officials in 18 states after receiving numerous complaints that the company did not live up to its advertised claims. Most of the complaints came as a result of consumers paying thousands of dollars up-front to have their IRS problem resolved for �pennies on the dollar to the IRS� through the IRS Offer-in-Compromise (OIC) program, yet not getting the results. As of 2006, only 12,000 OIC offers were accepted, down from 20,000 in 2004. The IRS Restructuring and Reform Act of 1998 opened the door for taxpayers to potentially have crushing tax debt forgiven by allowing a taxpayer to make settlement proposals to the IRS and �plead their case� that they could not pay the debt through an OIC. It seems, however, that the Act was signed into law, �Pandora�s Box� was opened. All of the sudden, late night TV was filled with commercials from �OIC mills� promising troubled taxpayers the chance to �pay pennies on the dollar to the IRS.� Although an OIC is one option for paying off IRS debt, there�s no sense in pursuing a payment option if there�s little hope that it will be accepted. A true professional will tell the client the best course of action based on their knowledge of the tax law, even if it�s not necessarily what the client wants to hear. Legally, a tax professional can represent a client before the IRS from thousands of miles away, but in a situation as stressful as IRS problem, it is advisable to work with someone to whom the client can speak with face-to-face, who lives in their area and has a reputation to uphold in their community. Finding a trustworthy company to present a case before the IRS may take more than watching a late-night TV infomercial.

Congress Wants to Start Tracking Your Credit Card Transactions

Tue, 05 Aug 2008 15:27:00 -0400

Congress has recently proposed a controversial bill that would require credit card companies to report payments made to merchants for credit card and debit card transactions to the IRS. The idea is to catch tax cheats, but opponents of the bill doubt that such regulations would actually catch anyone cheating. Companies that cheat on their taxes usually do so by failing to report cash transactions, not credit card transactions. This bill comes as congress has been pressuring the IRS to close the tax gap - what Americans actually pay in taxes � and what they should pay. It�s estimated that underreported income is responsible for 80% of the tax gap � approx. $136 Billion to $158 Billion. But according to the IRS, �Most of the understated income comes from business activities, not wages or investment income.� So, in other words, the IRS is looking for �under-the-table� money � money that�s being made by sole proprietors, partnerships and S-Corporations that is not being reported as income. Whether the current legislation makes it through a presidential veto remains to be seen. Either way, as you can see, the U.S. Government is coming for their money. If you are guilty of withholding payment from the IRS, chances are good that they will find out one way or another, If you suspect that your business is in trouble with the IRS, don�t risk having them shut down your business and put a swift end to your livelihood. By coming to a repayment agreement with the IRS, it�s more of a �hassle-free� method for the IRS than wage garnishments, bank account seizures, tax liens and other drastic measures.